tehag comments on Alas! Poor Mexico. So Far From God, So Close to Chaos:
Containment worked for the Soviet Union. Do you think it will work for Mexico?
I figure that’s worth a post.
Urban Issues
Gary Death Countdown II
The original Gary Death Countdown can be found here.
Some residents of Gary, Indiana are impatient for the death clock to count down to 2012 and have asked the Indiana Distressed Unit Appeals Board to not wait so long. The Miller Citizen’s Corp President Douglas Grimes said it straight out:
The board must insist that the city explore Chapter 9 bankruptcy, receivership and other options which could allow the city to reset its compass and move forward
Chapter 9 bankruptcy is not a liquidation but a reorganization under the federal bankruptcy code. To do it now would be admitting that the DUAB process is a farce that will not lead to a Gary government that can live within its means. An early bankruptcy is a vote of no confidence in the political tadalafiltablets class of the city and the ability of the DUAB to do its job helping that political class change the way the city does business.
Bankruptcy would help the city get out from under its $34 million (or more) in obligations beyond the structural imbalances imposed by the tax caps. It wouldn’t help with the imbalances themselves. For that, the DUAB process would need to work its way through to a successful conclusion or Gary’s elected officeholders need to be replaced by a state appointed receiver and committee that would be willing to make the changes needed and given the powers necessary to negotiate the pay reductions needed to bring expenditures in line with revenues.
Gary Death Countdown
[UPDATE: A follow-up Gary Death Countdown post is here.]
It’s much more likely not to happen than to happen but the clock is ticking for the death of Gary, Indiana. State law imposes property tax caps on all local governments far below the level Gary has grown accustomed to. Gary finances 80% of its $80M+ general fund operations through the use of property taxes. A vote on including the tax caps in Indiana’s Constitution is widely expected in 2010.
Gary has appealed and gotten special exemptions at a level unique in the state to maintain higher taxes while undergoing adjustments to bring government down to a size that can survive on anticipated revenue. Absent that relief, Gary’s 2010 property tax receipts would drop from a projected 62.9M to 28.1M.
As a condition of the transitional relief, a financial monitor was required for Gary and its related municipal districts (sanitary, storm water, public transport corp, and airport authority). The transition ends in 2012. If Gary has not adjusted sufficiently that it can handle somewhere between 20-30M less in revenue by that time, the 5th largest city in Indiana will be forced to declare bankruptcy.
Complicating matters are at least $34M in outstanding debts on top of its impending structural deficit. The term at least is used advisedly because unlike most cities, and most private organizations of its size and complexity, Gary uses a cash based accounting system. Future obligations that have not been presented for payment are not accounted for at all in a cash based system. The city government literally doesn’t have the capacity to accurately know what it owes. Because of the lack of information the financial monitor is forced to guess at some basic information.
The current Gary financial monitor’s report makes for frightening reading. Property tax revenue is scheduled to drop 50%+. There is no likelihood of a local income tax and Indiana does not share its sales tax revenue with local government. One of two casinos operating in Gary has entered bankruptcy and even before then a dispute with the casino operators disrupted payments to Gary. The bad news keeps on rolling for 265 pages.
Civic Amputations
Via Instapundit comes this story on plans to bulldoze large sections of 50 failing cities in Great Lakes states. That alone is enough to make one weep. A mere 40 years ago, these cities were still the economic titans of all the earth and now they are imploded wastelands.
Even more shocking and frightening is the strange, delusional state that seems to have settled over the political thinking of the majority of the people in the region. They seem to have no conception that their own political choices destroyed their communities. Worse, they’re rationalizing their own self-inflicted failure as a good thing.
Here’s Dan Kildare, Obama’s point man for the plan:
“The obsession with growth is sadly a very American thing. Across the US, there’s an assumption that all development is good, that if communities are growing they are successful. If they’re shrinking, they’re failing.”
What the HELL is wrong with these people?
Mad Max Days
The mayor in Flint, Michigan seems to be pondering something that used to seem impossible. The idea is to cut off abandoned neighborhoods from city services. No police, no fire, no services of any kind.
It certainly seems logical from a purely realistic standpoint. As more and more property is left to rot, there simply isn’t enough tax money coming in to provide services to every corner of the city. Might as well concentrate on the areas that still have enough legal residents still paying their taxes.
What do I think of the scheme? The very first thing that comes to my mind when someone tells me of a pie-in-the-sky project is “How are we going to pay for that?”, and this just seems to be the reverse. If the situation has deteriorated to the point that there just isn’t enough of a tax base to pay for basic services in less populated areas, yet the city government still tries to provide those services, then pretty soon the system would collapse and there wouldn’t be anything.
And, before I get a lot of angry comments, I realize that good, honest, hardworking people will suffer for this. People who have followed the rules, paid their taxes, and watched while the good neighborhood where they bought their house decades in the past became a criminal infested blight are going to get the shaft. But they will be screwed anyway if Flint goes bankrupt and everyone inside the city limits is left swinging in the breeze. They are just the one in the lifeboat who drew the short straw.
So far, it seems to be a notion the mayor of Flint has discussed only in passing, but I don’t see the situation improving any time in the future. It will be interesting to see if they have to go through with it.
(Cross posted at Hell in a Handbasket.)